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1 NEW YORK STATE INSURANCE DEPARTMENT
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3 In the Matter of:
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5 LIMITED BENEFIT HEALTH PLAN HEARING
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8
9 New York State Insurance
10 Department
11 25 Beaver Street
12 New York, New York
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14 Monday,
15 September 21, 2009
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17 The above entitled matter came on
18 for hearing at 10:07 a.m.
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1 A P P E A R A N C E S :
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3 MITCHELL GENNAOUI
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5 DANIEL GUMAER
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7 D. MONICA MARSH
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9 IVAN LAFAYETTE
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11 EUGENE BIENSKIE
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13 JOE FELDMAN, Audiographer
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1 P R O C E E D I N G S
2 MR. GENNAOUI: Good morning. Can
3 everyone hear us well?
4 Welcome to the first of three hearings
5 being conducted by the New York State
6 Insurance Department to gather information
7 about limited benefit health insurance
8 policies. Thank you all for taking the time
9 to attend this hearing, and we look forward to
10 hearing your testimony today.
11 I will begin by introducing our panel.
12 Starting with myself, my name is Mitch
13 Gennaoui. I am the deputy superintendent with
14 charge over the consumer services bureau.
15 To my right is Mr. Daniel Gumaer, and he
16 is a supervising insurance examiner with the
17 life bureau.
18 To my left is Monica Marsh, who is the
19 supervising attorney with our office of
20 general counsel.
21 And we have Mr. Ivan Lafayette. He is
22 deputy superintendent for community affairs.
23 And lastly, we have Eugene Bienskie. He
24 is assistant deputy superintendent and chief
25 of the consumer services -- chief of the
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2 health bureau.
3 The purpose of these hearings is to
4 gather information about the limited benefit
5 health insurance plan, with the goal of
6 assessing their value in the marketplace and
7 measuring the extent of any concerns about
8 these products or harmful practices associated
9 with the solicitation and sale of these
10 policies.
11 While the impetus for these hearings
12 have been the recent finding of deceptive
13 marketing of this product, our assessment
14 needs to value both the advantages of this
15 product to the consumer as well as any
16 shortcomings this product or its marketing
17 could have for a consumer.
18 These hearings are part of a process
19 that will evaluate the need to undertake
20 regulatory action related to limited benefit
21 health insurance products and the marketing
22 and sales of these plans. Such actions may
23 include issuing circular letters for
24 interpretive guidance on existing regulation,
25 the promulgation of new department regulation,
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2 or the introduction of proposed legislation to
3 the New York legislature.
4 In making its determinations, the
5 department is particularly interested in the
6 following issues: The role of limited benefit
7 health insurance plans in the New York
8 marketplace and the advantages that this
9 product offers to the consumer, the extent of
10 any concern related to the misrepresentation
11 of the benefits of these policies in the
12 marketing and sale of this product, the
13 marketing and sale of this product by
14 unlicensed individuals, whether the proper
15 disclosures that are required by law are being
16 executed and that they are being done so at
17 the appropriate time, concerns related to the
18 requirement for consumers to join associations
19 or groups for the sole purpose of obtaining
20 health insurance and how consumers are
21 affected by these groups; whether additional
22 oversight and regulation is needed to protect
23 the consumer, from strengthening advertising
24 rules and disclosure requirements to
25 restricting or prohibiting the sale of such
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2 policies.
3 We welcome your oral testimony today,
4 and we will value any written testimony you
5 may wish to provide. I am going to go over
6 the hearing procedures for those of you who
7 wish to speak or wish to submit oral
8 testimony.
9 If you would like to speak but have not
10 yet registered, please register with the
11 department representatives at the back of the
12 room.
13 We will be accepting any written
14 comments until October 30, 2009. All
15 comments, both oral and written, will be made
16 part of the public record. Written comments
17 may also be sent via e-mail or through regular
18 mail. There is more information on where to
19 send your comments on our website,
20 WWW.INS.STATE.NY.US, or you can get more
21 information from the department
22 representatives at the back.
23 The stenographer will be taking a
24 verbatim transcript of today's hearing.
25 Speakers will be called in the order shown on
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2 the agenda. If you miss your turn, you will
3 be able to speak at the end.
4 Please step up to the microphone when
5 you see your turn coming up. Please be
6 concise and limit your oral comments to 15
7 minutes, so everyone gets a chance to speak.
8 In order to help with time management,
9 we will indicate when you have five minutes
10 left to speak and again when there is one
11 minute left.
12 Please do not just read your written
13 comments aloud. We will read all written
14 submissions. Use your allotted time to
15 highlight the most important points of your
16 submission. Your testimony must address only
17 issues outlined in the hearing notes.
18 Members of the audience, please be
19 courteous and do not interrupt speakers.
20 Everyone here has taken the time to share her
21 or his views and deserves to be treated with
22 respect.
23 The panel may choose to question the
24 various participants. Please do not attempt
25 to interfere -- to infer any positions or
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2 leanings on behalf of the department, based on
3 the questions we ask or choose not to ask. We
4 have not made any decisions about what actions
5 the department will take, if any. Our
6 questions and statements today are designed to
7 facilitate and open a discussion of the
8 issues.
9 Once again, thank you for coming and for
10 your input today. We had two individuals who
11 were going to testify this morning, and
12 unfortunately their schedules would not allow
13 that testimony, so we have decided to read
14 their testimony into the record.
15 Mr. Gumaer will read first.
16 MR. GUMAER: This is from Mary Cranon,
17 who represents the United States Association
18 For Health Care, hereinafter referred to as
19 USA Plus. She is the executive director.
20 "Thank you for the opportunity to
21 provide public comments on the upcoming public
22 hearing regarding limited benefit health
23 plans. USA Plus is a nonprofit corporation
24 chartered in Washington DC in 1983. The
25 organization was formed to promote the
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2 adoption of equitable health care policy in
3 the United States, engage in nonpartisan
4 research, study and analyze for the benefit of
5 the general public regarding the health care
6 system of the United States and, on occasion,
7 publish the results of our research.
8 "USA Plus is committed to the promotion
9 of equal access to health care for all
10 Americans. We assist charitable, educational
11 and social welfare organizations in the
12 conduct of similar activities. Our foundation
13 has donated nearly $7 million to charities,
14 including the American Diabetic Association,
15 Cystic Fibrosis Foundation, Muscular Dystrophy
16 Association and St. Jude's Children's Research
17 Hospital, to name just a few.
18 "USA Plus provides home, travel, health,
19 entertainment, scholarship and other benefits
20 to its members. One of the benefits of
21 membership includes coverage under a group
22 limited benefits policy, which is sold by
23 licensed insurance agents. The agents that
24 market the USA Plus membership will typically
25 attempt to write a health insurance
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2 application on an individual or family.
3 Unfortunately, one or more of those
4 individuals will not qualify for the health
5 insurance or cannot afford it, so the USA Plus
6 program is offered. All of our other
7 marketing materials include disclaimers that
8 the limited benefit insurance is neither a
9 substitute nor replacement for major medical
10 insurance, preexisting limitation, and terms
11 and conditions.
12 "After a sale has been completed and
13 submitted by an agent, members of our staff
14 contact the member to discuss the product
15 purchased to ensure the member understands the
16 benefits and to again reiterate that the
17 USA Plus program is not a substitute or
18 replacement for major medical insurance.
19 "The bottom line is that these programs
20 serve a specific market: Individuals that
21 simply cannot afford health insurance or they
22 have been rejected by insurers, due to health
23 history. And although many states have high
24 risk pools, many individuals find the premiums
25 unaffordable.
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2 "The rising cost of health insurance,
3 coupled with the increased number of
4 uninsureable Americans, has created an
5 opportunity for some individuals to exploit
6 unsuspecting consumers by promising that the
7 limited benefit plan being sold is real health
8 insurance, and some have even placed HIPAA
9 compliant seals on their advertising materials
10 and websites. Although these claims should
11 seem obviously too good to be true,
12 unfortunately, individuals that are desperate
13 for insurance fall prey to these scams. These
14 fraudulent acts should be stopped, and good
15 practices up front can prevent a
16 misunderstanding and mitigate complaints from
17 consumers when claims are incurred.
18 We respectfully suggest that the
19 department consider requiring an organization
20 that offers a limited benefit plan should be
21 required to disclose the following to members
22 at time of sale: One, preexisting
23 limitations. Two, the limited benefit plan is
24 neither a substitute nor replacement for major
25 medical insurance. Three, the limited benefit
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2 plan may not qualify as credible coverage
3 under HIPAA.
4 "This action will prevent fraudulent or
5 misleading advertising and provide consumers
6 with adequate protections. The insurance
7 products themselves are already regulated by
8 the department, and we do not believe
9 additional legislation is required in that
10 regard.
11 "We trust that the department will
12 determine that limited benefit health plans
13 play a role in the marketplace. We appreciate
14 the opportunity to make these comments and
15 look forward to working cooperatively with the
16 department. Kindly include me in any further
17 interested parties communications on this
18 issue. Thank you."
19 MR. GENNAOUI: The second testimony will
20 be given by Mr. Bienskie.
21 MR. BIENSKIE: Thank you, Mitch.
22 The testimony that was given to us in
23 writing was from Kathleen Shure, who is senior
24 vice president of the managed care insurance
25 expansion for Greater New York Hospital
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2 Association. This is her written testimony.
3 "GNYHA represents nearly 250 hospitals
4 and continuing care facilities concentrated in
5 the New York City region but also located
6 throughout New York State, New Jersey,
7 Connecticut and Rhode Island. All the GNYHA's
8 members are either not-for-profit, charitable
9 organizations or publicly sponsored
10 institutions that provide services ranging
11 from state of the art tertiary services to
12 basic primary care necessary to support their
13 surrounding community, many of which are
14 medically undiscerned. GNYHA members and
15 their affiliated medical schools also provide
16 extensive medical education and training and
17 undertake cutting edge medical research,
18 benefitting patients all over the world.
19 "I appreciate the opportunity to testify
20 today on the subject of limited benefit health
21 insurance plans and commend Governer Paterson
22 and the New York State Insurance Department
23 for exploring this important topic."
24 MR. GENNAOUI: Gene, Ms. Shure did just
25 arrive. It would be best if she continued her
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2 testimony.
3 MR. BIENSKIE: Okay, Ms. Shure, I
4 apologize. Here I am, going on a hundred
5 miles an hour. Forgive me.
6 Do you want your testimony?
7 MS. SHURE: Where did you leave off?
8 I actually didn't intend to read it. I
9 thought I would just go over kind of the high
10 points.
11 I am Kathleen Shure from Greater
12 New York Hospital Association. We are not
13 entirely clear what the scope of the problem
14 is here. We know there is a problem with
15 these benefit packages, but from our
16 perspective as hospitals, it's not clear what
17 the volume is, in terms of the number of
18 people that are covered under these types of
19 policies.
20 We do know, from your information that
21 was provided during the hearing, that there is
22 a big issue with how these policies are
23 marketed and whether or not people really
24 understand the coverage that they have when
25 they are covered under these policies. And
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2 although that's a problem that needs to be
3 addressed, needs to be monitored, we think
4 that the bigger problem is that the policies
5 themselves don't provide adequate coverage.
6 From our perspective, they don't really
7 represent insurance. The basic purpose of
8 insurance is to provide protection against
9 catastrophic expenses, in the event of
10 whatever you are being covered for, and these
11 policies, by definition, don't do that.
12 Instead they provide protection for insurers
13 from catastrophic expenses, but not for the
14 consumers that are covered under the policies.
15 In terms of how we perceive this as
16 hospitals, there is clearly a ripple impact
17 when consumers are left, our patients are left
18 with high medical debt. Whether or not they
19 understood the coverage that they have or not,
20 they frequently cannot pay that debt. And
21 then what happens is frequently the hospitals
22 are left uncompensated for the care that they
23 provide.
24 Right now New York State hospitals
25 provide $1.6 billion a year in uncompensated
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2 care, and that's a combination of charity care
3 and bad debt. One of our concerns is that
4 this number is increasing, and there has also
5 been a change in state policy with respect to
6 how they will cover uncompensated care.
7 Hospitals have always been partially
8 reimbursed for the uncompensated care that
9 they provide. Probably about half of it does
10 get covered through a state pool. Over the
11 years that has been a combination of --
12 uncompensated care is charity care and bad
13 debt. More of it has been bad debt than
14 charity care, but the line has been blurred
15 between the two definitions.
16 But the state has changed its policy,
17 starting this year, and basically has said,
18 since we have limited funds to cover
19 uncompensated care, we want to focus it on
20 services provided to people that are
21 uninsured. So they have basically said going
22 forward we are going to reduce the coverage
23 for bad debt. We want to separate it out.
24 And when you report it to us, we want to first
25 cover charity care and then, to the extent
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2 there is dollars left over, we will cover bad
3 debt. That's being phased in over a period of
4 time. It began this year.
5 The concern we have is that at the same
6 time that's happening, bad debt is increasing.
7 One thing that we have noted is just the
8 increase in not necessarily these policies
9 because, again, it's hard for us to figure out
10 what the scope of this coverage is, but high
11 deductibles are increasing. High deductible
12 health plans are increasing.
13 The Kaiser Foundation just came out with
14 their employer benefit survey, and in that
15 survey report they indicate in the last three
16 years the percentage of population covered
17 with high deductible policies, with
18 deductibles from at least a thousand dollars,
19 has gone from three percent to 13 percent. In
20 just three years that is a big increase.
21 And people in this economy don't have
22 the money to cover the bills, when they get
23 those high deductibles. So as we see bad debt
24 increasing, as we see these policies
25 increasing, as we are in the middle of a
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2 national debate on what coverage should be, we
3 think we need to be very careful about what
4 kind of policies that we sort of promote going
5 forward.
6 We know that employers, because of
7 rising health care costs, have turned to
8 policies that push more costs onto insureds,
9 and that is a concern to us. We are
10 encouraged by some of the national debate, in
11 terms of establishing standards for benefits
12 going forward and establishing basically an
13 essential benefits plan or minimum benefit
14 plan that would cover a set actuarial value of
15 set health care costs. That, to us, is the
16 way to go. And we would be concerned about
17 whether or not these type of policies actually
18 replace policies that have more comprehensive
19 coverage, and we certainly wouldn't want to
20 see that happen.
21 So those are our main concerns in
22 looking at these policies, but again, as I
23 said earlier, from our perspective we haven't
24 seen a whole lot of them here in New York.
25 You probably know a lot better than I do
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2 whether or not this is becoming an increasing
3 source of coverage for people. It does
4 happen, but it hasn't been a major source of
5 bad debt, as far as we can tell.
6 MR. GENNAOUI: Thank you.
7 Are you hearing from your members that
8 the individuals that have these limited
9 benefit plans believe that the plans have more
10 extensive coverage?
11 MS. SHURE: I think the bigger problem
12 is they may understand the basic benefits that
13 they have. I think people are unaware of what
14 the true cost of medical care is, so they may
15 think they have a policy that covers several
16 hundred dollars a day in the hospital and not
17 realize that the cost of care they receive in
18 the hospital is a multiple of that. So I
19 think that's a basic problem in them
20 understanding how much of their core care is
21 going to be covered.
22 MS. MARSH: What percentage of your
23 patients would you say have this kind of
24 policy that you have seen?
25 I know you have said not much. What
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2 percentage would you say who are --
3 MS. SHURE: I don't know. We don't know
4 that.
5 We do know that bad debt is increasing,
6 but that's not because of this. That's
7 because of a lot of other things going on.
8 MR. GENNAOUI: Thank you very much for
9 your testimony.
10 MS. SHURE: Thank you.
11 MR. GENNAOUI: Linda, do we have any
12 more speakers scheduled? Any more speakers
13 scheduled?
14 LINDA: No.
15 MR. GENNAOUI: These hearings are part
16 of a process. That process began, I would
17 say, six to eight months ago when we began to
18 receive complaints in the department about
19 misleading and deceptive marketing of limited
20 health insurance plans.
21 We began several investigations of at
22 least two insurance companies that were
23 selling this and several producers that were
24 doing the marketing for those companies. This
25 hearing was -- these hearings are to solicit
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2 additional information from as broad a
3 spectrum as organizations and industry players
4 as we can put together, and I notice that our
5 attendance roster did show that. So we
6 encourage anyone here who would like to come
7 up to the podium to say a few words from their
8 perspective. We would appreciate any comments
9 they may have. And if you are not prepared
10 today, we do have two more hearings, one on
11 September 24 in Newburgh and one on September
12 30 in Rochester, New York, where you can make
13 your presentations at those two hearings.
14 We also encourage you to submit any
15 written testimony, as I mentioned earlier.
16 The information concerning all of this is on
17 our website. Anyone else interested in
18 stepping up and commenting today?
19 Thank you very much for attending, and
20 that's it for our testimony today.
21 Thank you.
22 (Time noted: 10:29 a.m.)
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1 C E R T I F I C A T E
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3 STATE OF NEW YORK )
4 ) ss.
5 COUNTY OF NEW YORK )
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7 I, YAFFA KAPLAN, a Notary Public within
8 and for the State of New York, do hereby
9 certify that the within is a true and accurate
10 transcript of the proceedings taken on
11 September 21, 2009.
12 I further certify that I am not related
13 to any of the parties to this action by blood
14 or marriage and that I am in no way interested
15 in the outcome of this matter.
16 IN WITNESS WHEREOF, I have hereunto set
17 my hand this ______ day of October, 2009.
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20 _____________________________
21 YAFFA KAPLAN
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